The cap of 65,000 new H-1B visas for the fiscal year that began Friday has already been reached, CNET News.com has learned.

A federal official on Friday said the annual limit for the controversial guest worker program has been met for fiscal year 2005, which runs from Oct. 1, 2004, to Sept. 30, 2005. United States Citizenship and Immigration Services, which processes applications for the H-1B program, is no longer accepting petitions for visas for initial employment for this fiscal year, said the official, who spoke on condition of anonymity.

The visas, which allow skilled foreign workers to work in the United States for up to six years, have frequently been used by technology companies. That the cap has been reached as of the first day of the fiscal year is sure to stir up debate over the visa program. Businesses are seeking an exemption from the annual cap for foreign students graduating from U.S. schools with master's and doctorate degrees. Labor groups oppose the proposal.

Legislation to create such an exemption, along with other changes to the H-1B and L-1 guest worker programs, is under serious discussion in the U.S. Senate.

Exemptions to the cap already exist for institutions of higher education, nonprofit research groups and governmental research organizations.

Although the cap has been reached, H-1B visas for 2005 have not necessarily been issued. USCIS has not finished processing the applications, the official said. Visas will be issued by the state department throughout the year, he said.

U.S. employers do not have to attest that they sought U.S. workers to fill a job before applying for an H-1B visa, but they are supposed to pay the prevailing wage to the guest worker. One-third of the approved visa applications in 2002 were for system analysts or programmers, though that figure was down from half of all approved visa petitions in 2001, according to USCIS.

In February, the government said it had received enough applications to reach the cap for the last fiscal year, which ended Thursday.

The fact that all the fiscal year 2005 visas have been accounted for so quickly is not a complete surprise. As of Aug. 18, USCIS had received petitions amounting to 71 percent of the annual cap.

Earlier Friday, Compete America, a coalition including businesses, universities and research institutions, warned that the H-1B allocation likely would be exhausted within weeks, "leaving U.S. companies with no ability to hire highly educated foreign nationals for nearly one full year."

Sandra Boyd, chair of Compete America, said in a statement: "A logical and immediate remedy would be to exempt foreign students receiving advanced degrees from U.S. universities from the H-1B cap...This is a critical talent pool that U.S. business and research institutions cannot afford to lose to foreign competitors. Indeed, we should encourage these individuals to stay."

But labor advocates point to a recent study finding significant job losses in the technology sector and high unemployment among tech workers. Critics also say guest worker visas accelerate the trend to send highly skilled work offshore to countries such as India or the Philippines.